Tuesday, 19 October 2010

COST REDUCTION v cost cutting...

Dear Friends

Tomorrow the coalition government will announce sweeping cuts to the Public Sector and Higher Education is set to experience savage cut backs.

I wish the politicians would emphasise cost reductionrather than cost cuts. Since in the former costs are reduced while attempting to protect if not enhance quality. This is a continuous process and should be part of the fabric of any organisation especially in the public sector regardless of whether there is an economic downturn or not. Cost reduction has its roots in my favourite Japanese business philosophy namely KAIZEN.

The following joke illustrates the aforementioned concepts.

''President Clinton ordered a cost saving program to the U.S. Army commander. "Cut anywhere, but you must cut in any way possible."

OK said the commander and looked around at some way to cut spending. Perhaps if he could get rid of some old records, that may please the President. So he went to the storage depot and discovered that the Army still had menus and supply orders of food from the Civil War. Very pleased showed the President, and asked if he might destroy all the documents.

"Why, yes," said Clinton."But be sure to make two copies of each before you do."

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About Me

I am currently an accounting & finance academic and previously worked as a Chartered Certified Accountant / CPA specialising in Not-For-Profit-Accounting / Auditing / Consulting and the SME sector.
I have lived, worked and studied in Central Asia, Turkey, Canada, USA, Pakistan and the United Kingdom. I have also visited Africa and China for the first time this year.